US Dollar firmer, extends the upside to 89.50

• DXY up for the third day in a row above 89.00.
• US 10-year yields near tops around 2.90%.
• Activity in US markets return after Monday holiday.

The greenback, tracked by the US Dollar Index, is trading on the positive ground for the third consecutive session today and is looking to consolidate the recent breakout of the 89.00 barrier.

US Dollar attention stays on the FOMC

The index continues to recover part of last week’s sharp sell off against the backdrop of a softer tone in the risk-associated space, particularly around EUR, GBP and JPY.

The up move in the buck has been pari passu with a recovery in yields of the key US 10-year reference, which managed to retake the upper end of the range around 2.90%, some 5 bps lower than multi-year peaks recorded last week.

In the broader picture, market participants will look for extra details on the prospects of further tightening by the Federal Reserve throughout the year in tomorrow’s FOMC minutes, while attention should also be on Fed-speakers ahead in the week: Kashkari, Quarles, Dudley, Kaplan (Thursday), Mester, Williams (Friday).

What will we be looking at around the buck? In the short term, protectionism, risk appetite trends, renewed deficit concerns, higher inflation and liquidity conditions remain poised to drive the sentiment around the greenback in the medium to longer run.

US Dollar relevant levels

As of writing the index is up 0.35% at 89.52 and a break above 89.64 (10-day sma) would aim for 90.57 (high Feb.8) and finally 91.00 (high Jan.18). On the flip side, the immediate support aligns at 88.26 (2018 low Feb.16) seconded by 88.13 (200-month sma) and finally 86.88 (support line off 72.70).